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Humanities academics are in danger of being reduced to "intellectual lap dancers" by the radical changes to higher education in England, a history professor has warned.

Speaking at a conference in Cambridge, Richard Drayton, Rhodes professor of imperial history at King's College London, likened the coalition government's approach to the way in which Western funders imposed free-market ideologies on developing countries.

"Those who know what 'structural adjustment' meant in Africa, Eastern Europe and Latin America in the 1980s and 1990s will recognise what is being applied to Britain in the name of 'austerity'," he said.

"A nomadic global pirate class buys 'onshore' services from prostitutes and politicians, journalists, mercenaries and academics...(who) can become a kind of intellectual lap dancer, gyrating to excite the attention of the rich and to provoke small tips."

What was depressing, added Professor Drayton, was that "most British scholars have made only token opposition to these changes".

"The British Academy has offered cowardly hand-wringing, (while) vice-chancellors and many administrators have been active quislings, merely asking how they can best adapt to the new order," he said.

Professor Drayton's withering critique was made at a conference titled The Arts and Humanities: Endangered Species?, which took place last week at the Centre for Research in the Arts, Social Sciences and Humanities at the University of Cambridge.

It brought together leading scholars "to articulate why and how the arts and humanities have been historically understood to matter" and how they should respond to current threats, including cutting the teaching grant for many disciplines.

Fenella Cannell, reader in social anthropology at the London School of Economics, said the arts and humanities had an essential role in fostering "a comparative imagination". Current policy ran the risk of eliminating "every comparative perspective on the present order of thinking" and "every act of imagination from which future perspectives may emerge", she said.

Delegates also heard from Simon Szreter, professor of history and public policy at Cambridge, who noted that the old view of the Industrial Revolution - as "a Big Bang in the North of England" - had underpinned our understanding of economic growth and influenced many misguided policies. In demolishing this myth, social historians had performed a public service, he argued.

For Raymond Geuss, professor of philosophy at Cambridge, the humanities retained their traditional role "in the pursuit of self-knowledge", but also had much "instrumental value for society".

"If we do not have a publicly funded and institutionally distinct realm for what I call 'humanistic' discussion, we can easily end up with a situation in which the 'need to know' of Rupert Murdoch and the US Department of Defense...will even more seriously skew public discussion than it does now," he said.

The debate was followed this week by a speech by David Willetts, universities and science minister, who defended the government's decision to abolish teaching grant funding for most arts and humanities courses. Speaking at the British Academy on 1 March, he said that critics had "misunderstood" the funding position, and that the coalition was pursuing a "scrupulously neutral policy" by cutting funding for all courses up to a certain level.

He added that he was clear that "the humanities and social sciences are essential to a civilised country."